Updated: Aug 24, 2020
Welcome to #2 in the branding series, "It's time to take stock and rethink your brand."
What is purpose, and why does it matter for your business?
"People don't buy what you do,
they buy why you do it." - Simon Sinek
When we get quiet and trust our instincts, when we look back on our lives, we know the truth of who we are. We know there are things that drive us and things we just can’t help ourselves from doing. I’m not talking about the bad habits that shadow us. I am talking about our gifts and our strengths that lead us to the good places and make us feel strong, and on the right path.
I am talking about your “purpose;” the source-code behind purpose-driven brands.
It’s the individual that is driven to start, lead and sustain companies, brands, and people. Therefore, clarifying and communicating purpose for leadership in the growth and sustainability of a company is critical.
If you are in a leadership position in your company, your personal purpose shapes the direction of the company in everything from product development to branding, operations, hiring, and securing investors. And, being on purpose or not can make or break your company.
There are many valid explanations of purpose coming from many perspectives. You just have to find what is true for you. Here are some definitions:
The reason for which something exists or is done...- Dictionary.com
To give life meaning one must have a purpose larger than one’s self. - Will Durant, early 20th-century author, and philosopher
Purpose is a company’s reason for being beyond profits. Purpose guides its business growth and impact on society. - Carol Cone. One Purpose.
A company’s reason for being that simultaneously helps solve a societal problem and creates significant financial value for the company...shared value is the most powerful way for companies to deliver on purpose. - FSG, a mission-driven consulting firm.
For organizations, it is the foundation of what creates a company and of every experience. It is the underlying essence that makes a brand relevant and necessary.- Bill Theofilou, Accenture. Forbes, Purpose Series.
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Note: Purpose vs. Mission vs. Vision
There is sometimes confusion over what purpose, vision, and mission mean. All organizations may define them differently and use them in various combinations and formats. For clarity here, this is how I define them:
Purpose: Why you exist. (e.g., Facebook: We believe that connection is a human right.)
Mission: What you do and how you will do it. (e.g., Nordstrom’s: Give customers the most compelling shopping experience possible.)
Vision: the difference you want to create in the world together. (e.g., Uber: We will change the way the world moves.)
Why is purpose especially important during a crisis?
The current disruptive environment is causing leaders to rethink how they operate and to dig deeper into what's important. They are looking for a new and sustainable direction and solutions for profit, customers, employees, and other stakeholders.
How people see their purpose is changing and the value that it provides as they navigate a volatile world.
Customers and potential customers are paying very special attention to how companies respond during this crisis, how they treat their stakeholders, especially their employees and the community around them.
Employees are looking to leadership for direction and stability. In times of ambiguity and dislocation, fear can take over. Even exceptional employees get disoriented and confused. They may become paralyzed and fearful.
EY, a global leader in assurance, tax, transaction, and advisory services, shares some telling facts in, How can purpose-reveal a path through uncertainty?
78% of Americans think companies should take action on important issues facing society.
73% of business leaders say that having a well-integrated purpose will help their company navigate disruption.
66% of executives are profoundly rethinking their purpose as a result of disruption.
52% of leaders are evolving their definition of Purpose to have greater community impact.
CEOs realize companies need an enduring purpose beyond profit
We will not always be in a crisis; however, the world of business is evolving.
Over the last century, the majority of U.S. companies had been following the philosophy of Milton Friedman, the famous University of Chicago economics professor, “The Social Responsibility of Business Is to Increase Its Profits.”
In 2019, the Business Roundtable comprised of the top 181 CEOs of leading U.S. companies from Apple to Walmart, issued an open letter titled, “Statement on the Purpose of a Corporation.” The one-page declaration said, “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities, and our country.”
Organizations that have a clearly defined purpose,
generally offer far better value for investors, shareholders,
for employees and all stakeholders.
- Catherine Garrett Cox – Supervisory Board, Deutsche Bank AG
EY, a global leader in assurance, tax, transaction, and advisory services, defined “purpose as to build a better working world.” They recently conducted a global survey of 474 executives with Harvard Business Review Analytic Services in its report, The Business Case for Purpose, reveals some important details on purpose “in action.“ Based on its research, E.Y. shared:
95% of leaders in one survey say that their organization has a purpose. (How Can Purpose Reveal a Path Through Uncertainty?) Most executives believe purpose matters, and 44% said their company is trying to develop one.
84 % said purpose can affect an organization’s ability to transform.
46% said their company has a strong sense of purpose.
Purpose-driven companies can increase value with customer loyalty, employees, and other stakeholders to include shareholders, investors, and partners.
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Customer loyalty and respect
89% of consumers are more likely to buy from companies that support solutions to particular social issues. For more than 50% of those, purpose is the most important factor influencing brand choice when quality and price are equal. -Edelman’s 2012 Global Good Purpose Report.
80 % of leaders surveyed in The Business Case for Purpose, said it helps increase customer loyalty.
62% of global consumers want companies to take a stand on the social, cultural, environmental, and political issues that they care about the most. 63% of global consumers prefer to purchase products and services from companies that stand for a purpose that reflects their own values and beliefs, and will avoid companies that don't. 65 % of global consumers say their purchasing decisions are influenced by company words, values, and actions. - Accenture Study.
52% of business leaders report that purpose has a strong link to customer loyalty -The Business Case for Purpose.
By standing for something bigger than what they sell,
turning into customers’ beliefs and taking decisive action,
companies have the chance to recast their customer relationships
and connect with customers on a deeper level.
Employee engagement and loyalty
89% of executives surveyed said a strong sense of collective purpose drives employee satisfaction. And, employee morale is 3x higher in firms that are actively involved in their community (purpose) than their less-involved counterparts.”
77% of millennial employees say organizational culture (driven by purpose) is just as (or even more) important as base salary and benefits. -2015 Virgin Pulse Survey
60 % of millennials stated that they chose to work for their current employers due to their sense of purpose. -2015 Deloitte Survey
Purpose clarifies expectations. A clearly defined purpose makes delegating responsibility simpler as for a growing business because expectations are clear and consistent.
Recruitment and retention is much more effective when employees believe and embrace company purpose.
When employees’ work environments match their personal values, they are more productive.
Shareholder value and profitability
Jim Stengel, former P&G global marketing director, collected ten years of data across 50,000 brands. He found a direct relationship between a brand’s ability to serve a higher purpose and its financial performance.
The “50 higher-purpose brands” in their study grew 3X faster than their competitors in a 10-year period. Additionally, he found if he had invested in the “Stengel 50” over a decade, it would have been 400% more profitable than investing in the S&P 500.
Over the past 10 years, brands with meaning (purpose) have outperformed the stock market by up to 206% -Havas, 2017,
Purpose can increase shareholder value by $1 billion, according to a 15-year study of the S&P 500, Project ROI, 2015.
83% of companies that over-perform on revenue growth link everything they do to purpose -Google & SAP, 2018.
84 % said it can affect an organization’s ability to transform.
Purpose-driven brands are more balanced with a focus on long-term culture.
Purpose enhances the ability to manage risk. A strong, purpose-driven culture provides grounded realistic optimism.
How to find your purpose
There are many different ways to identify your purpose. You could take a quick quiz and start from there or embark on a thorough examination that provides longer-term insights and impetus for sustainable change and impact.
Start by identifying your personal purpose and consider why you are doing this. Here’s a hint, if it’s just about making money, perhaps this is not for you. It’s best if you believe in the idea of purpose and even the concept of a higher purpose.
Regardless if you are an individual or a leader of a company, the process to uncover your purpose is similar. However, as a leader of people, you must enroll others into the “we” shared purpose.
Review these basic questions. Ruminate, and talk about your thoughts with others. Write it down it, if possible, journal daily, and apply your purpose in all you do.
Need a little help? Here are some purpose resources:
Simon Sinek shares in his 2009 TED Talk, inspiring leaders, “Start with Why.”
Watch Jack Canfield’s Video How to Discover Your Life Purpose. He also has a short purpose exercise in his book, “The Success Principles.”
Take Oprah’s 28-question, “Who-are-you-meant-to-be-self-assessment." Based on personality science, she has identified seven "striving styles," modes of thought and behavior that direct us to seek satisfaction in different ways.
For a deep dive, read The Golden Thread: Where to Find Purpose in Different Stages of Life, by Holly Woods PhD. Dr. Woods shows us how elemental purpose is in shaping critical personal and business decisions. Reflecting on her life’s journey and others’ stories, she explores the stages of purpose. She demonstrates where the journey can take us in our business and brands to be more authentic, impactful, and sustainable.
Read the Purpose Playbook by The Shared Value Initiative. Putting purpose into practice with shared value for company purpose development.
Conscious Capitalism: Liberating the Heroic Spirit of Business by John Mackey and Raj Sisodia. They share a vision of profit as a by-product of treating all stakeholders and the environment as ends and not means with great examples of world-changing businesses.
in an e-book for Fall 2020 delivery
How do we apply purpose to our company and brand?
Having a purpose doesn’t necessarily make you purposeful. Acting on purpose is what counts.
Many businesses still need to learn the importance and application of purpose in business. The E.V. Report, The Business Case for Purpose, reveals some important details on purpose in action and suggests that purpose is a powerful though underutilized tool:
90% of respondents believe their company understands the importance of purpose. However, only 46% use purpose to inform strategic and operational decision-making.
Once you’ve articulated your purpose, be prepared to walk the talk.
If it’s not real or believable, it will inspire cynicism rather than trust. People want things they can connect with, and if they can apply this to the brand, they will vote with their pocketbook.
It is not an easy task. However, brands that do apply purpose to their business stand heads above their competition.
Steps to apply purpose in your company
First, consider if you can set your bar higher and take a stand for the greater good.
Integrate purpose into your brand, corporate DNA, and your story.
Create value for your customers, employees, shareholders, and all stakeholders.
Embrace your purpose and sell your pursuit, not your product.
Articulate an inspirational purpose that is simple and clear.
Ensure all stakeholders have to buy in and own it.
Create a very clear aspirational buy-in and alignment with your employees.
Embed purpose into behaviors, decision making, systems, and metrics.
Link employee performance to purpose KPS’s.
Communicate your purpose in all internal and external communications. Check out law firm Hanson Brigett’s Guiding Principles.
And again, always walk your talk. (Hanson Bridgett does.)
I use our purpose in every talk I give.
I get town halls around the world, a couple each month.
I always talk about our purpose and our values
and the fundamentals of what our business strategy is.
- John Haley, CEO, Willis Towers Watson
Some purpose-driven examples
KIND® Healthy Snacks has successfully used brand purpose as its point of difference. It has become the 3rd largest snack bar maker in the world. The company’s commitment to improving public health with nutritious snack foods and a new level of transparency to ingredient sourcing has resonated with health-conscious consumers.
Watch CEO, Helen Russell of Equator Coffee talk with Laurie Rinker on her purpose-driven brand and a B-Lab, with their “chain of wellbeing.” Or read the blog.
Helen Russell, CEO. Equator Coffees
Airbnb's purpose is to "belong anywhere". It's a refreshing and inspiring purpose with clear benefits for its users, striving to create the kind of warm interpersonal connections that are groundbreaking.
Google's motto was, "don't be evil." But with the formation of its parent company Alphabet, the phrase was removed from their code of conduct. Instead, it now opts for the much subtler phrase: "do the right thing.”
CVS CEO Larry Merlo, in 2014 “left billions of dollars on the table because the sale of tobacco products was inconsistent with the company’s purpose of helping people on their path to better health. Now they need to take the next step to not only do no harm but to do good proactively.
Take the next step and beyond
Have you considered setting your bar higher and taking a formal step to align your business practices with the Conscious Capitalism movement, securing a B-Lab Certification, or becoming a Benefit Corporation? These organizations are heavily steeped in purpose and are comprised of leaders and companies that many honor and respect. What are they doing right? And, what can you do to follow their lead?
It's a small world, and everything we do impacts others and the world for the next generation.
Regardless if you're happy where you are in your business, consider your purpose as the foundation for any long-term sustainable business for you and all your stakeholders. Are you ready to take the next step for a purpose-driven brand?
Look for Laurie's next article in the series
"It's time to take stock and rethink your brand."
#1 Why is branding important now? #2 Is your brand purpose-driven? #3 How will you change to better serve your customer and the future? #4 Do your customers see your point-of-difference over the competition? #5 What is the message you want your brand to deliver? #6 Have you been keeping your "brand promise?” #7 Are your employees brand-aligned, and do they deliver your brand promise? #8 Do you have an updated brand strategy?
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in an e-book for Fall 2020 delivery
Brands That Deliver™ and Laurie Pillings Rinker:
Laurie is a consultant, author, speaker, and podcaster. As principal of BrandsThatDeliver, she works with large to small clients who want to get focused and transform their brands and revenue. We help companies define their brand, engage customers, and deliver on their promises to develop marketing programs while encouraging social good. Email email@example.com